Many reasons why unionizing Amazon won’t be easy

In the end, it wasn’t even close. By late Friday morning, even with roughly a thousand ballots outstanding, so many workers at an Amazon warehouse in Bessemer, Alabama, had voted against joining the Retail, Wholesale and Department Store Union that the “No” tally now represented more than half of all ballots cast.

As journalist and former labor movement strategist Rich Yeselson tartly suggested, unions shouldn’t hold elections they’re likely to lose this badly. Too, a newly opened warehouse in Alabama might not be the place to start a drive to unionize a national company.

But whatever your opinion about this election – or unions more generally – this likely won’t be the last big and closely watched campaign to unionize an Amazon facility. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)

For unions, the company represents something they haven’t had since the early 20th century: a private-sector target with the kind of scope, and profit margins, to claim some real value for the workers.

The lack of such targets has been a significant reason the union share of the workforce has been in steady decline since it peaked in the mid-1950s, at around 35%. Unionization rates have declined almost everywhere in the world since 1990.

What has changed almost everywhere simultaneously is that manufacturing is a smaller share of employment in developed countries. In 1950, 3 out of every 10 American jobs were in manufacturing. In 2020, fewer than 1 in 12 jobs were. And compared with the labor-intensive industries that replaced them, manufacturing is fantastically productive. Consider two giants: Walmart and General Motors. In 2020, General Motors generated about $790,000 in sales, and $41,500 in profit, for each of its 155,000 employees. Walmart had more than four times the annual revenue of General Motors, but needed almost 15 times as many employees to do so. Sales per employee were only $240,000, and the company’s profit margin on those sales is also lower, so net income per employee was actually around $6,750.

That’s not nothing, of course! But realistically, a union can’t claim 100% of profits for workers, which creates a conundrum for would-be organizers. When net income per employee is that low, it’s harder for unions to improve worker compensation net of the dues needed to pay for the union – especially since a retailer whose employees are flung out across thousands of locations is likely to be more expensive for the union to organize, and represent, than even huge manufacturers with dozens of plants.

Unfortunately for American union organizers, U.S. manufacturing has increasingly been automated or outsourced, and what remains is facing fierce competition from companies abroad. Companies can’t just jack up prices to compensate for higher labor costs, as their mid-century predecessors could. That’s why unionization is increasingly concentrated in government jobs, which face limited competitive pressure, and which can be centrally organized.

That’s also why Amazon represents such an enticing target. Amazon’s dominance suggests it ought to have some pricing power. It has hundreds of thousands of new workers who could be brought into the union fold. Its warehouse facilities are even bigger than a Walmart Supercenter, so they’re more efficient to organize; they’re also significantly more productive than traditional retail. Yet since the company’s whole business model now depends on being close to every consumer to facilitate quick delivery, it can’t just move operations to a friendlier state, much less Vietnam.

But while unions want to organize Amazon, they still face a steep climb. More than half the company’s operating income comes from Amazon Web Services. That money can’t simply be transferred to the warehouse workers, since business lines being subsidized by more profitable products are vulnerable to cuts.

Yet take the AWS profits away, and Amazon looks a lot closer to Walmart than GM in organizing potential, even if you assume the company could raise prices a bit - and raising prices would be complicated by the fact that an estimated 60% of sales come from the site’s third-party sellers. But an equally daunting problem might be the country that GM made.

Before mass automobile ownership, workers tended to cluster conveniently close together. Today’s workers might come by car from an hour away and aren’t so easy to reach. The very productivity that makes Amazon financially attractive to organize leaves little time for workers to pause and make friends with their co-workers, building social networks unions can leverage.

Those are structural disadvantages the union is apt to face at whichever Amazon facility it targets. So while the name of the town might be different in future organizing drives, the result might be much the same.